A heightened perception of Wellington's earthquake risk is not only sucking money out of the economy but turning potential investors away, building sector sources say.

Premiums for inner city apartment and commercial buildings have risen steeply since Christchurch's earthquakes began two years ago, with stories of 200 to 1400 per cent increases.

There have been reports of building owners unable to get earthquake cover, or only having one choice as insurance companies limit their books to the amount of reinsurance they hold.

Neville Brown, Wellington City Council's programme director for earthquake resilience, said the high insurance premiums were being driven not so much by New Zealand insurers but by their overseas backers.

"And they perceive the risk in Wellington and indeed the rest of New Zealand is the same as the risk is in Christchurch, and we know that is not the case."

Engineering consultancy Impact has estimated that the premium hikes will take an extra $100m out of the Wellington economy.

Impact general manager Garth Palmer said it was not uncommon for his commercial property clients to be facing four to five times the premiums they used to have.

"One of them's got about $250m worth of property, just about all of it in Wellington, who's seen his premium go from $300,000 to $1.6m."

But he added that New Zealand had been paying "way under the global market" until the Christchurch earthquakes awakened reinsurers to the risk.

Brent Slater, of the Wellington branch of the Property Council, was worried about investment and partially blamed the media for fuelling concerns overseas.

"We're seeing a noticeable drop-off in investment, particularly in Christchurch and Wellington, as a result of the media overstatement of the effects of the earthquakes."

Premiums for his own building, Pethrick Towers, had jumped from $48,000 in 2010 to $96,000 one year later and was now $130,000.

That was "more than a floor's rental, so that's a big dent in the net income of the property.

"If you multiply that by the whole of Wellington, that's a lot of money going out of Wellington into the overseas insurers." Others said the insurance sector appeared to be ignoring Wellington's tougher building code and the real odds of an earthquake.

They pointed to recent findings by Crown research institute GNS, which reduced the chance of a major rupture on Wellington's faultline in the next 100 years from 30 per cent to 10 per cent. However, GNS also notes that the region had three other faultlines which could affect the city. Jon de Groen, body corporate chairman of the Civic Chambers building, said the level of premium hikes for even new buildings indicated that earthquake strengthening was not the issue.

"Even if you strengthen, it makes no difference. They don't make Auckland pay the rates we pay.

"They're picking on the weak link," said de Groen.

"It's not about the strength of the building, it's about the fact they have a whole lot of buildings in downturn Wellington they don't want".

Property Council chief executive Connal Townsend said some pain had to be expected as the reinsurers tried to recoup their losses from Christchurch.

A national survey of council members showed local insurance companies were making "a somewhat nuanced response in terms of premiums, but, look, there was a very big earthquake and none of this should come as a big surprise".

FULL INSURANCE MAY BE TOO DEAR - ENGINEER

Wellington building owners are waking up to the fact that like in California, they might no longer be able to afford full insurance, says engineering consultant Garth Palmer.

Palmer, a co-director of Impact Ltd, said the main problem was the overseas backers, or reinsurers, of local insurers had little information to go on.

They now wanted very specific details about a building's risk of damage, not simply its risk to public safety, which was what the building code focused on.

California had been similar to New Zealand, with full insurance, until a quake in the 1980s shattered the state insurance market.

Today only 20 per cent of businesses there had quake cover and most of them were insured only for the amount of damage their buildings could expect in a big shake.

If a $30 million building had a probable maximum loss of $12m and insured for just that, "that's a substantial reduction" to one's premiums, Palmer said.

Another way companies could cut their insurance costs was to bundle their properties together. Insurance companies were more inclined to do in-depth risk assessments if the economies of scale made it worthwhile, Palmer said.

He did not expect premiums would return to pre-Christchurch earthquake levels, but thought they would eventually fall to a "sustainable" level.